CORRECTED-Worst drought in decades hits Brazil's Northeast

(Corrects number of cities hosting world cup to 12 from 14 in
paragraph 14)

* Largest blackout since 2001 struck region in October

* Gov't sending corn to try to save starving livestock

By Caroline Stauffer

SAO PAULO, Jan 4 Brazil's Northeast is suffering
its worst drought in decades, threatening hydro-power supplies
in an area prone to blackouts and potentially slowing economic
growth in one of the country's emerging agricultural frontiers.

Lack of rain has hurt corn and cotton crops, left cattle and
goats to starve to death in dry pastures and wiped some 30
percent off sugar cane production in the region responsible for
10 percent of Brazil's cane output.

Thousands of subsistence farmers have seen their livelihoods
wither away in recent months as animal carcasses lie abandoned
in some areas that have seen almost no rain in two years.

"We are experiencing the worst drought in 50 years, with
consequences that could be compared to a violent earthquake,"
Eduardo Salles, agriculture secretary in the northeastern state
of Bahia, said in an emailed statement.

Dams in the Northeast ended December at just 32 percent of
capacity, according to the national electrical grid operator.
That puts them below the 34 percent the operator, known as ONS,
considers sufficient to guarantee electricity supplies.

As reservoir levels fell, state-controlled Petrobras
imported nearly four times more liquefied natural gas
(LNG) in the first nine months of 2012, a back-up for
hydro-power generation that has hurt the firm's profits.

The low water levels have set off alarm bells in a country
with a history of energy shortages that crimped economic growth
as recently as a decade ago.

President Dilma Rousseff dismissed talk of an energy crisis
on Dec. 27, calling the idea of Brazil potentially needing to
ration energy "ridiculous."

However, there have been some signs of strain already. In
October, the Northeast experienced its worst blackout in more
than a decade, knocking Bahia state's important petrochemical
industry offline.

A spokesperson at Brazil's agriculture ministry said the
federal government has not calculated the financial cost or the
loss to crops expected from the drought. However, the ministry
is trying to mitigate the economic impact by making additional
lines of credit available to small farmers, the official said.

Crop supply agency Conab is also sending corn to the region
in hopes of saving livestock.

Bahia state officials, however, said the measures were not
enough and on Dec. 30 asked for more federal resources to help
some 20 million people living in the semi-arid tropical region
stretching north from Minas Gerais state.

"The last comparable drought in the region was in the early
1980s... even if rains come in the next few days it's not going
to make a difference for some areas," Celso Oliveira, a
meteorologist with Sao Paulo-based Somar, told Reuters.

The states that have received the least rainfall are Bahia,
Brazil's fourth most populous state, Pernambuco, whose capital
Recife is one of 12 host cities for the 2014 soccer world cup
and an important port, and Piauí, Oliveira said.

Even with expected crop losses in the Northeast, Brazil
still expects an overall record soybean and strong corn harvest
this season thanks to sufficient rainfall over the main
center-west and southern producing areas.
(Additional reporting by Jeb Blount; Editing by Brian Winter
and Vicki Allen)

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